DCO Weekly 21 September 2017

Latest developments including progress on a National Policy Statement for Water Resources, a new consultation on improving and streamlining housing delivery, launch of a ‘Green Task Force,’ a Written Ministerial on the Nuclear Safeguards Bill, a call from Sir John Armitt to engage the public in the infrastructure debate and new infrastructure reports.

Whilst there is a pipeline of DCO applications expected in coming months, the Planning Inspectorate's current workload is just two at the pre-application stage and one at the decision stage.

The number of DCO applications over the next 18 months is likely to rise sharply, with a number of energy project applications nearing submission and a large number of highways schemes expected to move forwards. We are also seeing a push from industry groups and the sector, calling for new projects and for a strategic approach to project delivery to ensure that schemes can be promoted successfully. Three recent reports issued examine the need for infrastructure and delivery capability. Two we report on below, by EY and Arcadis, both tackling issues around the capacity of the relevant sectors to be able to deliver the substantial project pipeline. Some of these points are well known, albeit very much still to be addressed, such as the skills and training gap. Other areas – technology and digital solutions – are less often addressed but crucial if the country is going to be able to build the infrastructure we need. The third report takes stock of a different issue – which projects make it off the starting blocks on to the list which is supported by Government? The Institute for Government's report, 'How to value infrastructure – Improving cost benefit analysis', considers the importance of getting the list right – we have a finite amount of money to invest and should direct that at the projects which are most likely to boost productivity and economic growth.

The Institute identifies the challenges in undertaking cost benefit analysis, and the errors that are commonly made. It promotes an approach which allows for more exploration of dynamic effects – those that don't just benefit an economy, they change its structure – whilst also advocating a consistent approach across government and the use of published 'reference costs' for infrastructure projects.

The ideas promoted are logical and worthy of review by government and others involved in the process. A number of them would undoubtedly cost money to implement – no doubt the authors' view would be that the benefits to the economy would far outweigh this, but that will be a hard argument to win with current public finances. The recommendations also assume that all factors behind infrastructure decisions can be subject to cost benefit analysis – they probably should be, but the reality of marginal seats, 'grand' projects and other political factors will always be difficult to remove.

Progress on water resources NPS

Defra has started a formal process of stakeholder engagement on the development of a new National Policy Statement (NPS) for Water Resources. Defra previously announced in March this year that itwould develop a NPS that would set out the need for nationally significant water supply infrastructure projects in England in order to accelerate the process for securing development consent under the Planning Act 2008 regime. The new NPS will support the delivery of future large scale supply projects that have been earmarked in water company resource management plans.

Engagement with stakeholders on the make-up of a new NPS will gather initial views and thoughts and is the next stage in the process, ahead of a planned public consultation in winter 2017.

"New Planning Approach" to speed up housing delivery

Communities and Local Government Secretary, Savid Javid, has announced "an innovative approach to planning new homes to ensure they’re built where most needed". The consultation also sets out the government's plans to publish a revised National Planning Policy Framework (NPPF) in Spring 2018 after consultation, reworking the 'Housing Delivery Test'. Updated planning practice guidance will also be published alongside the revised NPPF.

The new consultation on "further measures set out in the housing white paper to boost housing supply in England" will run until 9 November 2017 and sets out the government's proposals to "reform the planning system to increase the supply of new homes and increase local authority capacity to manage growth".

Following the launch of the £2.3 billion Housing Infrastructure Fund which is to facilitate essential infrastructure, such as schools and roads required alongside new homes, the government has also stated that it will explore bespoke housing deals with authorities in "high demand areas with genuine ambition to build", and provide further support to local authority planning departments through a £25 million capacity fund.

According to the consultation, plan makers can put forward proposals that lead to a local housing need above that given by the approach set out, and could be the result of a strategic infrastructure project.

New Green Finance Taskforce launched

BEIS and HM Treasury have launched a new Green Finance Taskforce that will "bring together senior leaders from the financial sector" to work "with industry to accelerate the growth of green finance" to deliver new investment in green and sustainable projects that will assist the UK in meeting carbon reduction targets.

The first meeting of the Taskforce is expected to take place later in September 2017, after which the terms of reference will be published.Climate change minister, Claire Perry spoke about the new initiative at the opening of Climate Week in New York on 18 September 2017.

Clark has said that: “As part of preparations for EU Exit, the UK is establishing a domestic nuclear safeguards regime to ensure that the UK continues to maintain its position as a responsible nuclear state and that withdrawal from Euratom will not result in the weakening of our future safeguards standards and oversight in the UK”. A new domestic regime to “deliver to existing Euratom standards” and a regime that “exceeds the standard that the international community would require from the UK as a member of the IAEA (International Atomic Energy Agency)”.

Clark said that discussions with the EU were “on-going” and that the government would be “exploring a number of options for smooth transition from the current Euratom regime to a domestic one” to ensure that UK and Euratom Community continue to work closely together in the future in respect of the civil nuclear sector.

A Nuclear Safeguards Bill was previously announced in the Queen’s Speech earlier this year and “will be brought forward in due course,” according to the Secretary of State.

We need to “do more to consult and listen to a wide range of views to ensure we identify where the needs are, and to secure the support of the public as one of the country’s biggest infrastructure investors,” said Armitt.

UK construction must be able to "innovate on a massive scale" if it is to successfully deliver on the country's infrastructure ambitions, according to a new report.

Arcadis, the construction consultancy, said that delivery of planned projects on the UK's National Infrastructure and Construction Pipeline (NICP) depended on the industry doubling up on output for at least the next decade. This could only be done with a "step-change" in project delivery, based around digital solutions, investment in skills and training, better collaboration and offsite manufacture, it said.

The Arcadis report, which also called for better alignment of individual projects with the UK's industrial strategy and regional development agendas, coincided with a new report from EY, which warned of growing regional skills gaps putting large public sector projects at increased risk of delays and budget hikes. EY called for project leaders to leverage technology, share resources and be more flexible on skills and recruitment in order to address these gaps.

Global infrastructure expert Graham Robinson of Pinsent Masons, said that there was a "widening funding gap" between the industry's projected output and the UK's ambitions.

"There is a clear need for government to address its own capability and capacity to initiate major infrastructure investments if it wants to drive up levels of investment in infrastructure from 0.8% of GDP to between 1.0% and 1.2% of GDP - an up to 50% increase - which government wants to try to achieve by 2020. A new model is needed, which means a much more integrated and technology-driven approach," he said.

Pinsent Masons, has been working in partnership with the Institution of Civil Engineers and techUK on a new study, which aims to establish the opportunities and challenges that arise from the increasing convergence between digital technology and physical infrastructure and how they might be addressed.